There’s a hotel near my place that I always recommend because it’s such a cool anomaly. Back in about 2007, the building took form as one of dozens of new condo projects spurred by an unprecedented boom in our area.It was an odd project in many ways. It was a few miles out of town with scant services nearby but the land was probably cheap and the demand for leisure and lifestyle properties was seemingly insatiable.
Well, we all know what happened the following year. The financial collapse ended or postponed the dreams of millions but it was particularly tough on projects like this one. Its proponents were relying on that unprecedented demand to fill up the lovely suites they were building and hoping the location and awkward access would be accepted by the new owners. When the financial realities hit, the scaffolding came down, the machines were loaded on trailers and the contractors licked their wounds as they tried to claim pennies on the dollar for their outstanding invoices in the bankruptcy proceedings.
The unfinished hulk sat perched on a steep hillside viewed by the thousands of people who passed by each day on the busy highway below. It served as a constant reminder of the hard times. But at least the roof was on and it was mostly protected from the elements.
A few years later as things opened up someone took another shot at getting those 60 or so suites to market and the building was substantially completed. But the market still hadn’t recovered enough and it went bankrupt again. By then, the real value of the project had bottomed out and its future as a condo development seemed doomed. Then someone had a new idea.
I’m sure the new owners paid pennies on the dollar for the expensively finished building. They converted a storage area on the main floor into a lobby, added a restaurant where the common area/rec room was supposed to go and opened an utterly charming hotel. The location makes much more sense for that use because of that busy highway but the economics were the real boon. The capital investment was so low the new owners are able to rent the full-sized condo suites, with multiple bathrooms, full kitchens and spacious decks for the same rates as ordinary hotel rooms a few miles away in town. It’s full all summer and gets its share of business traffic in the off-season and will continue to operate for as long as the owners and their successors want it to.
I think similar stories are about to be played out in the aviation industry as the inevitable capital cash burn that seems to be a hallmark of big new ideas in our trade take their toll in the burgeoning eVTOL business. Anyone who remembers the debacle that was Eclipse Aviation joined me in shaking their heads at the seemingly endless supply of money that seems to fall from the skies when a new aviation development takes hold.
I speak of the collection of multi-copters, tilt wings, even flow through fuselage vehicles that loosely started as a “flying car” movement and has evolved into Advanced Air Mobility. Billions in capital has been raised and burned by dozens of companies and the body count is rising. Smaller players have already dropped out, taking with them the nest eggs of thousands of investors, some of them looking for a quick buck but plenty more believing in the future and promise of a whole new way to move people safely and sustainably. The attrition is anticipated and accepted as a necessary, if seemingly wasteful, part of the process.
But I think it’s fair to say that most of us in aviation were at least a little surprised when Volocopter made its Christmas Eve announcement that it had run out of cash. Volocopter can legitimately lay claim to pioneering the multi-copter concept and it had spent 13 years developing and, most importantly, commercializing the concept. It raised hundreds of millions of dollars and attracted a huge backlog of orders.
And it somehow wasn’t enough.
So, with almost stereotypical stoicism, the company founders and visionaries said what they thought were their good-byes to the hundreds of like-minded supporters and friends on their staffs who also drew a pay check from that dream for more than 10 years. There was a short-lived rescue attempt by other investors but that didn’t pan out. It looked like the dream was dead.
But someone else was keeping an eye on the proceedings and biding their time. A couple of months later Wanfeng, the giant Chinese car company that owns Diamond Aircraft, reached under the couch cushions for some loose change and picked up all that creativity, all that engineering talent, that drive and passion and the hardware that resulted for a mere $12 million. Volocopter became a subsidiary of Diamond and will benefit from the hard-earned experience of what is now a mature airframer with a highly respected line-up of innovative products.
Diamond knows about the grit it takes to get an aviation company off the ground and become a competitor in an industry that’s notoriously hard on newcomers. It will be fascinating to see what it makes of an aviation concept that seems so out of left field for its operation.
Now that Diamond has broken the ice, we have to wonder who’s next. Although most of the prominent eVTOL companies have what appears to be solid funding, I have to think there are other Volocopter-type opportunities waiting for forward-thinking mainstream aviation companies. Most of them have stayed out of the AAM business, likely because the wounds of the Eclipse era are still a little raw.
Those of you old enough to be my kids will recall that most GA companies were as caught up with the Very Light Jet craze as those investors pouring money into Eclipse. All of them, including Diamond, diverted millions of dollars in always-scarce capital to meet what they assumed was an existential threat. A couple of those designs actually got into production but only one, Cirrus’s VisionJet, is still rolling off the line.
Using the lessons learned from the VLJ movement and harnessing the creative genius of the next generation of aviation visionaries we could end up with a significant new chapter in the business and some vehicles that may have capabilities to fill needs we don’t know we have. I have to wonder if Cirrus, Textron, Piper and a few others are waiting to snap up similar high tech bargains and turn them into businesses.
It won’t be easy. All business is hard but it’s especially tough out on the cutting edge. When the inevitable pressures and demands of creating a whole new aircraft category pile up, I can recommend a cozy hideaway in a little piece of paradise in British Columbia with unlimited recreation opportunities and abundant orchards and vineyards almost on the doorstep. Call the Castle At Swan Lake in Vernon but ask for a suite in the back overlooking the pool instead of the highway. They’re cooler and quieter than the ones in the front and closer to the parking lot.
